00:01
Hello, let's look to this first question.
00:07
Let me, for simplicity, let me draw the graph.
00:13
It will be easier to find the answer.
00:15
Here we have the price, here we have quantity, we have the demand curve, this is demand and this is the supply curve.
00:28
It's given that income of buyers in the market for a market for, an inferior good decreases.
00:37
So since income decreases, it has a positive effect on demand for inferior goods.
00:46
And this is very important that this good is inferior.
00:48
So income increases the demand for inferior good.
00:57
And what about the supply? it's given that here we have the technological advancement and supply will increase.
01:09
So before this let me denote here we have the equilibrium price and equilibrium quantity.
01:18
So let's look what will happen if we have these two changes.
01:24
But we don't know which change is greater, which shift is greater by magnitude.
01:32
And let's explore both cases.
01:35
In the first case we have relatively small change in supply and in the second case we have relatively big change in supply.
01:45
In the first case, we have the new equilibrium which is here.
01:53
We have equilibrium price and equilibrium quantity.
01:56
In the second case, the new equilibrium is here.
02:00
Here we have equilibrium price and equilibrium quantity.
02:04
As we can see in both cases, quantity will increase.
02:11
But we don't know exactly what will happen with the price.
02:15
It can either increase or decrease.
02:18
So here we don't know.
02:21
Here quantity will increase anyway.
02:25
And now let's find the correct answer where price is ambiguous and quantity will increase.
02:35
And the correct answer is b.
02:37
Equilibrium quantity will increase but the impact on equilibrium price would be ambiguous b is the correct answer to this question okay now we have this second the second question saddle shoes are not popular right now so very few are being produced if saddle shoes become popular then how will this affect the market for saddle shoes...